The world is facing multiple challenges that we too as a company face. These include climate change, international conflicts and economic crises, for instance. Our ambition is to leverage science and technology to achieve sustainable progress for mankind.
Our approach: sustainable progress
For us, sustainable entrepreneurship and profitable growth go hand in hand; we can remain competitive only by creating added value for society. Through our innovative and high-quality products, we want to help meet global challenges. At the same time, these types of product secure our financial performance capability.
Responsible action is an integral part of our company culture. This also includes respecting the interests of our employees, customers, investors, and society. For more than 350 years, our company has been shaped and guided by strong values. Our success is built on courage, achievement, responsibility, respect, integrity, and transparency – values that underpin our understanding of sustainable entrepreneurship. We want to set an example for ethical conduct.
Safety and ethics matter just as much to us as business success. We mitigate ethical, economic, environmental, and social risks as far as possible. From the early stages of development through to disposal, we keep an eye on the entire life cycle of a product. We apply strict sustainability standards to our procurement activities. During product manufacture, we strive to keep the environmental impact as low as possible, which is why safe production techniques, high environmental standards and strict quality management are of course so important to us. And with our sustainable products, we also help the companies that we supply to achieve their sustainability goals.
We closely monitor new global trends and challenges. For example, in order to clearly understand the complex nature of the expected changes, we make use of the so-called scenario technique, which enables us to identify and incorporate aspects of strategic relevance. In addition, we participate in dialogues and initiatives, consult with other organizations in our industry and assess media and news coverage. This allows us to minimize risks while also leveraging new business opportunities.
Implementing the strategy globally
The rapidly growing challenges facing both society and the environment require a clear objective for the coming years. Consequently, sustainability is an essential element of our enterprise strategy. We are pursuing three strategic sustainability goals.
Our sustainability strategy
In order to achieve our sustainability goals, we are concentrating on seven focus areas within which we are realizing numerous initiatives and projects today and tomorrow, measuring our progress as we go.
Implementing the sustainability strategy
In 2022, we focused on creating the right conditions for achieving our sustainability goals. All three business sectors derived sustainability strategies from the overarching company strategy and started executing them. We are fostering the cultural change within the company by embedding sustainability aspects even more firmly into daily work and the decisions made by employees. Training courses and best-practice sharing are two routes we follow to achieve this.
On the basis of 14 key indicators, which we defined back in 2021, we record and assess our progress towards achieving our sustainability goals. In 2022, we implemented various digital working tools that we believe will allow us gain greater transparency with regard to our achievements. For instance, we record internal and external sustainability data in our ESG database, allowing us to compare, correlate and use them as the basis for initiatives and measures.
In the year under review, we specified that also when assessing potential acquisitions, we would always include sustainability aspects. This will be the case even more so in the future, also when it comes to capital allocation and investment decisions as well as research & development. To assess the potential impacts of our products throughout their entire life cycle, we use a scorecard developed in-house. We introduced this scorecard for all three of our business sectors in 2022.
Moreover, we added a sustainability factor to our Long-Term Incentive Plan (LTIP) in 2022. It measures the performance of three selected sustainability goals over a period of three years, thus making it possible to increase or reduce target achievement resulting from the key financial performance indicators by up to 20%. Details on how this sustainability factor is calculated can be found in the Compensation Report.
We are now in the process of transforming the company and are integrating sustainability into the innovation process and all parts of the value chain. It is our aim to decouple the growth of our businesses from negative environmental impacts.
Our key indicators
Goal 1: In 2030, we will achieve human progress for more than one billion people through sustainable science and technology.
Focus area
Sustainability key indicators
Further details
Sustainability innovation and technology
◆ Percentage of newly published patent families with positive sustainability impact
The key indicator is used to determine the sustainability factor for the Long-Term Incentive Plan of Merck KGaA, Darmstadt, Germany.
In order to assess the impacts of our products, technologies and business activities on the environment and society, we developed the Sustainable Business Value (SBV) method. It enables us to calculate the positive and negative impacts of our activities along our entire value chain, based on various sustainability criteria. The result is a monetary value that quantifies the benefit that product has for consumers, the environment and society, for instance. In 2022, we worked to make the method more user-friendly.
Our operational sustainability goals
Our three strategic goals make our long-term sustainability ambition clear. In order to achieve them, we have also defined operational sustainability goals. These are more specific, may apply for a shorter time frame and are aligned with our current business activities.
Goal 1: In 2030, we will achieve human progress for more than one billion people through sustainable science and technology.
Focus area
Operational target
Actions 2022
Status
Material topic
Health and wellbeing impact
By 2023, test our Equitable and Value Access Strategy with pilot programs for two products of our innovative product portfolio in at least two low- and middle- income countries.
Two pilot programs have been implemented in Malaysia and Indonesia
In progress
Health for all
Health and wellbeing impact
Pilot outcome-based contracting models in 1-2 markets for our Fertility portfolio by 2023
Held dialogues with third parties
In progress
Health for all
Health and wellbeing impact
By 2030, we will provide sufficient praziquantel tablets to treat up to 90 million patients per year.
More than 200 million tablets provided in 2022, enabling the treatment of 80 million patients.
In progress
Health for all
Health and wellbeing impact
By 2024, we will start the launch phase to make arpraziquantel (oro-) dispersible tablets, if approved, available in the first selected African countries. By 2030, arpraziquantel will be available for treatment of up to 12 million preschool-aged children.
We submitted the regulatory application to the European Medicines Agency (EMA) in November 2022. The file is under review by EMA; its scientific opinion is expected by Q4, 2023. This will facilitate WHO pre-qualification and local registration in African countries. We aim to provide the drug, once approved, through an innovative and sustainable access mechanism for neglected tropical diseases (NTDs).
New target
Health for all
Health and wellbeing impact
By 2023, we will develop and implement new key strategies in proactive benefit-risk management, process optimization, automation, and pharmacovigilance oversight.
Implemented a tiered portfolio management on the basis of a risk-based approach to further concentrate resources on safety activities where it is of most value for the patients
Implemented real-time pharmacovigilance intelligence to adapt our methods, processes and deliverables to the changing global legislative requirements for pharmacovigilance and patient safety
Practice proactive and predictive safety by developing a robust, cross-functional benefit-risk strategy that helps us deliver transformational therapies to patients
Optimized and automated the processing of individual case safety reports from collection to reporting to further improve quality, while maintaining a high level of timely compliance in reporting
Target achieved
Product safety & quality
Goal 2: By 2030, we will integrate sustainability into all our value chains.
Focus area
Operational target
Actions 2022
Status
Material topic
Sustainable and transparent supply chain
By 2024, we will increase transparency of our supply chain by the following two sub-targets: 1) 70% of our relevant number of suppliers will be covered by a valid sustainability assessment 2) 90% of relevant supplier spend will be covered by a valid sustainability assessment. Each of these two sub-targets are weighted 50%.
In 2022, we worked with our relevant suppliers on new assessments and re-assessments, based on the TfS/EcoVadis Assessment process. As a result, 1) 46% of our relevant number of suppliers were covered by a valid sustainability assessment; 2) 82% of our relevant supplier spend were covered by a valid sustainability assessment.
In progress
Sustainable supply chains
Securing our social license to operate in all regions
By end of 2023, all subsidiaries of our company will have a new Third Party Risk Management process and tool. By conducting due diligence on all high risk third parties, we check the legal compliance of our business partners.
Launch of the new Third Party Risk Management process and tool for pilot countries with high-risk vendors.
In progress
Governance & compliance
Securing our social license to operate in all regions
By 2022, we will roll out a risk identification process in a staggered approach to get a better risk overview on bribery and corruption related risks.
Completion of risk assessment with global functions followed by selected country risk assessments.
Target achieved
Governance & compliance
Securing our social license to operate in all regions
By 2024, we will roll out the process and tool to further streamline the centralized governance for the interactions with healthcare stakeholders and to further increase monitoring as well as risk control capabilities.
We will implement a new tool governing our interactions with healthcare stakeholders via a phased approach, with European countries being in the first phase. We expect it to be implemented by the end of 2023.
In progress
Governance & compliance
Sustainability culture and values
We aim to bring our LTIR (Lost Time Injury Rate) below 1.0 by 2025.
Through our BeSafe! program we continuously raise employee awareness of workplace dangers and teach them rules for safe behavior
In progress
Health & safety
Sustainability culture and values
Aim for gender parity in leadership by 2030.
We focused on building a diverse talent pipeline by recognizing the growing pool of talented women and fostering their development through mentoring, sponsoring and talent programs while also acquiring female talent externally.
In progress
Diversity, equity & inclusion
Sustainability culture and values
Aim for 30% nationals from Asia, LATAM and MEA in leadership (Role 4+) by 2030.
We offered development opportunities for underrepresented ethnic talent as well as focused on sourcing international and underrepresented ethnic talent. Additionally, we leveraged technology by introducing the employee advocacy tool and promoting our culture navigator tool. Furthermore, we continued to enhance mentoring/sponsoring programs and to support internal employee networks for employees of various ethnic origins and international employees. We also continued to train recruiting and sourcing employees.
In progress
Diversity, equity & inclusion
Sustainability culture and values
Aim for 30% of underrepresented ethnic colleagues in United States leadership (Role 4+) by 2030.
We offered development opportunities for underrepresented ethnic talent as well as focused on sourcing international and underrepresented ethnic talent. Additionally, we leveraged technology by introducing the employee advocacy tool and promoting our culture navigator tool. Furthermore, we continued to enhance mentoring/sponsoring programs and to support internal employee networks for employees of various ethnic origins and international employees. We also continued to train recruiting and sourcing employees.
In progress
Diversity, equity & inclusion
Sustainability culture and values
By 2026, all leaders will have participated in inclusive leadership workshops.
64% of our leaders took part in the Inclusive Leadership Training.
In progress
Diversity, equity & inclusion
Securing our social license to operate in all regions
By 2030, we will make a substantial impact on the 4R (reduction, replacement, refinement and responsibility) and make our success visible by meaningful performance indicators implemented in our three business sectors.
Meaningful Performance Indicators: Our business sectors Life Science and Healthcare developed 4R strategies, respective key performance indicators are in place and regularly tracked.
Professional Training and Education: A training concept is in place, defining the professional education for all roles at our company on a global level that deal with in-vivo processes. We launched the Animal Affairs Academy and a vivarium rotation program is in place.
Highest Animal Welfare Standards: We committed ourselves on a global level to apply EU animal welfare standards for all non-rodents internally and for third parties and implemented further company-wide standards such as the Global Blood Sampling Standard.
Qualification of third parties: We implemented internal and external auditing processes for all third parties where animals are housed for or on behalf of our company.
In progress
Ethical conduct
Securing our social license to operate in all regions
By 2025, we will have all our animal facilities AAALAC accredited and will have established an Animal Affairs Academy which provides knowledge in Animal Science and Welfare and drives progress towards our 4R ambitions.
In 2022, two company sites were successfully reaccredited. Program descriptions for one so far unaccredited site were submitted in 2022.
In progress
Ethical conduct
Securing our social license to operate in all regions
By 2025, we will strengthen Group-wide governance of all animal using functions and increase transparency by introducing IT-based solutions to measure progress and optimize data management.
Group wide governance of all animal-using functions. We implemented:
local Animal Welfare Officers at all sites
a dedicated animal usage review process (MAUR)
a global incident reporting process
setup of Animal Using Vendor (AUV) project management
IT-based solutions:
We implemented a digital animal work approval process
We started a digitalization process to facilitate data accessibility, knowledge exchange, risk management and reporting.
Transparency:
Internal Transparency regarding global animal usage at our company (internal and external/contracted) have been achieved and respective IT solutions implemented.
We strengthened communication internally and externally through Group-wide plenary sessions and a communication working group.
To demonstrate our commitment, the Agreement for Transparent Information and Open Communication about Animal Research in Germany has been signed.
New target
Ethical conduct
Goal 3: By 2040, we will achieve climate neutrality and reduce our resource consumption.
Focus area
Operational target
Actions 2022
Status
Material topic
Water and resource intensity
By 2025, improve water efficiency at manufacturing sites by 10% (measured by the Water Intensity Score).
Treatment of wastewater from production Optimization of water- using processes Rainwater harvesting
Further improving the wastewater treatment process by adding a fourth treatment stage where necessary.
In progress
Resource efficiency
Climate change and emissions
By 2030, we intend to reduce direct and indirect greenhouse gas emissions (Scope 1 and 2) by 50% (2020 baseline).
Systematic examination of the energy consumption at our individual production sites Reduction of process-related emissions Emission reduction through green fleet Training more employees in energy management Implementation of electrification opportunities
In progress
Climate action
Climate change and emissions
By 2030, we aim to reduce our emissions along the entire value chain (Scope 3) by 52% per euro gross profit.
Supplier decarbonization Shifting transportation from air to sea
In progress
Climate action
Climate change and emissions
By 2030, we aim to cover 80% of our purchased electricity with renewables.
Purchasing electricity from renewable sources
In progress
Climate action
Water and resource intensity
By 2025, reduce the environmental impact of our waste by 5% in comparison to our baseline year, 2016. (measured by the Waste Score).
Continuously looking for ways to improve our production processes and disposal methods
In progress
Resource efficiency
Roles and responsibilities
Our Executive Board has Group-wide responsibility for our sustainability strategy. It has adopted our three strategic goals.
The Group Corporate Sustainability unit is responsible for developing and shaping the sustainability strategy and it informs the Executive Board at least once a year about the progress made and the need for action. It is part of the Group function Corporate Sustainability, Quality and Trade Compliance (SQ), which reports to the Chair of the Executive Board. Consequently, overarching Executive Board responsibility for Environment, Social, Governance (ESG) also lies with the Chair of the Executive Board.
Group Corporate Sustainability is also responsible for coordinating our company´s Sustainability Board (previously Corporate Sustainability Council), which was set up in 2022. The Sustainability Board is chaired by the Head of SQ and consists of representatives from our business sectors and from key Group functions, such as Procurement, Communications, as well as Controlling and Risk Management. Members from Europe, the United States and Asia provide input on regional sustainability aspects.
The Sustainability Board steers and monitors the Group-wide implementation of the sustainability strategy. It aligns the strategy with the individual business strategies, defines priorities and specifies globally applicable sustainability guidelines. In addition, the Sustainability Board ensures that the initiatives of our various business sectors, Group functions and subsidiaries align with our global sustainability strategy. Moreover, it recommends corresponding initiatives to the Executive Board. Within their respective area of responsibility, each Executive Board member is also responsible for sustainability, reviews the priorities that have been set, and decides on the implementation of initiatives.
In 2022, the Sustainability Board met nine times by video conference. The participants addressed the following topics: Implementing the sustainability strategy in the business sectors, key indicators for measuring and steering sustainability within the company, lowering greenhouse gas emissions, and supply chain due diligence requirements.
The measures adopted by the Sustainability Board are implemented by our line managers as well as by interdisciplinary project teams. To achieve our operational sustainability goals and depending on the topic, responsibility is assigned to specific teams, functions and business units. Those responsible for implementation exchange ideas and coordinate actions in an overarching committee. They identify synergies between the projects and align their direction with our sustainability goals.
An external expert committee for sustainability issues has been supporting our company since 2021. The Sustainability Advisory Panel (MSAP) consists of six independent experts on sustainability-related topics from several institutions worldwide. They advise the members of the Sustainability Board on selected issues and assess the sustainability of our company’s business models as well as planned activities. Moreover, they provide their external insights to help address societal and political challenges and developments that could be strategically relevant for our businesses. This panel is chaired by the Head of SQ.
The members of our Sustainability Advisory Panel
Due diligence
Due diligence means a risk analysis exercised with particular care that is done in preparation for a business transaction, e.g. an acquisition.
EHS
Short for “Environment, Health and Safety”, this refers to environmental management, health protection and occupational safety throughout a company.
Environmental, Social, and Corporate Governance (ESG)'
ESG represents an evaluation of a company’s collective conscientiousness for environmental, social and governance factors. An ESG score is compiled from data collected surrounding specific metrics related to intangible assets within the enterprise.
LTIR
The lost time injury rate measures the number of accidents resulting in missed days of work (one or more days) per one million working hours.
No-effect threshold
The no-effect threshold is defined as the concentration of a given substance below which no adverse effects to species in water can be expected. The respective values are derived from eco-toxicological studies according to recognized scientific standards.
Pharmacovigilance
The science and activities related to the detection, evaluation, understanding, and prevention of adverse reactions or other drug-related problems.
Role
Our company uses a market-oriented system to rate positions within the company. To facilitate consistency across the organization, each position is assigned a specific role, with an overarching job architecture classifying each role as one of 11 levels, 15 functions and an array of career types (Core Operations, Services & Support Groups; Experts; Managers; Project Managers).
SQ
The abbreviation for our Corporate Sustainability, Quality and Trade Compliance function.
Scope 1
This includes emissions that occur in our company, for instance by generating energy from fossil fuels or by releasing process-related emissions.
Scope 2
This includes emissions from purchased energy such as electricity, heat, steam, or cold.
Scope 3
Scope 3 includes indirect greenhouse gas emissions, such as the extraction and production of purchased materials, transport-related activities, waste disposal, and employee travel.
Scorecard
An evaluation tool for measuring, documenting and controlling activities using metrics.
Stakeholder
People or organizations that have a legitimate interest in a company, entitling them to make justified demands. Stakeholders include people such as employees, business partners, neighbors in the vicinity of our sites, and shareholders.
Trace substances
Substances dissolved in water that are present only in minute amounts. Also referred to as micropollutants, these are synthetic substances present in concentrations ranging from one nanogram to one microgram per liter of water.
Vivarium
The vivarium, also known as animal research facility, is a specially designed building type, which accommodates controlled environments for the care, use and maintenance of experimental animals.
